The Detroit Land Bank Authority could soon petition the State of Michigan to explore new ways to help increase minority participation in its demolition program, after a Free Press investigation showed only 26 percent of contracts go to minority businesses.

The issue surfaced Monday in the Detroit City Council's Public Health and Safety Committee after Council President Brenda Jones called for a discussion in response to the June 16 Free Press investigation, which examined how federal Hardest Hit funds are awarded in Detroit, which has the nation’s largest federally funded demolition program.

Demolition Director Tammy Daniels said the authority is in the infant stages of looking at whether it's feasible, and legal, to implement a Housing and Urban Development measure that requires a percentage of contracts and jobs go to local low-income businesses and those that employ a substantial number of local residents.

Much of Detroit's demolition work is funded through federal Hardest Hit Fund dollars, which are distributed to states via the U.S. Department of Treasury. Detroit's HHF program is overseen by the Michigan State Housing Development Authority's Michigan Homeowner Assistance Nonprofit Housing Corporation, which was created to handle the federal funds.

Although the Treasury Department and HUD are two separate federal agencies, Detroit's Auditor General manager Laura Godspeed said she has collected data and responses that indicate the city may be able to apply the same standard to both federal and city-funded demolitions.

In documents obtained by the Free Press on Monday, Godspeed reached out to several entities, including the U.S. Treasury Office of Financial Stability Office, which indicated that the city could indeed petition MSHDA to adopt the HUD guidelines for the Land Bank to use in awarding contracts funded by HHF money, which could help diversify the contractor pool.

HUD also indicated that the city could adopt the same standard. The auditor general's office is currently undertaking an audit of the entire demolition program — including examining how the Land Bank and Detroit Building Authority awards contracts.

"To me HUD Section 3 is a way to answer some of your concerns with making sure our poor residents and low-income residents have opportunity to employment and to also help those businesses that employ them," Godspeed said during the Monday discussion. "Most of the entities (reached out to) said they could not opine but we did receive response from HUD, saying yes, the city may choose to adopt these federal requirements."

The City of Detroit's law department last year appeared to indicate that the city could not adopt the same standards.

"We have already been thinking about trying to figure out ways to try and increase minority participation," Daniels said in an interview after the meeting. "HUD Section 3 was part of the conversation. We have not yet got to the point formally of reaching out to MSHDA and saying can we do this. That's where we were headed. ...They would be the ones who will lobby (to Treasury) on our behalf."

HUD's section 3 requires that 51 percent or more of a business be owned by Section 3 residents — individuals who meet a certain income threshold — and it also requires that at least 30 percent of full-time or permanent employees fall within a specific threshold.

Companies also are required to provide evidence of a commitment to subcontract 25 percent or more of the total dollar amount of all subcontracted work to businesses that meet the two criteria.

Daniels said she wants to make a "meaningful proposal" to MSHDA but "they are the ones who interface with the Treasury," which could be the one to make a determination of what the Land Bank can ultimately do.

In total, just 16 percent of the federal Hardest Hit Fund money disbursed for the demolition program has gone to black-owned firms, which has raised concerns since Detroit has a 79 percent black population.

The Free Press found that Detroit’s demolition program is dominated by two large companies, Adamo and Homrich, which have received the bulk of the dollars thus far. The companies have earned $40 million and $32 million, respectively— or more than $72 million combined. The city has $108 million left to spend from Hardest Hit funds.

Jones said the lack of diversity within the program is a major concern that needs to be addressed soon.

"We still don't have enough minorities with contracts and we're still talking about it," Jones said. "It gets to a point of, when are we going to do something about it? When does everybody put their heads together? ... It gets sickening. We're talking about a city that probably has more minorities than any other municipality in the state of Michigan but then we have less minority contractors doing jobs where there's a lot of money to do them."

City and Land Bank officials previously told the Free Press that federal and state laws have essentially tied their hands in regard to what they can do to increase minority participation.

The city again Monday pointed to a recent rule change by the state that now prevents it from giving geographic preference to companies based in Detroit. That allowed the city to give more opportunities to minority companies, Land Bank Executive Director Saskia Thompson previously said.

Officials also said a recent clarification from MSHDA that requires companies to have five years of experience has also led to at least one black-owned company, Gayanga Co., being unable to participate in the HHF-funded program.

But officials said they've been able to create more opportunities for minority-owned companies, including Gayanga, through city-funded demolitions that don't have the same requirements.

"We have three new companies that we just brought into the picture that are getting a large amount of contracts," said Boysie Jackson, Detroit's director of procurement. " Gayanga — they're a company that can do the job and they are superbly qualified to do the business. ... We feel we're working hard on this."

Jones questioned whether city officials have had any meetings specifically with minority contractors to hear some of the concerns that she said she's continually hearing.

"I heard you say we don't have enough minority contractors but we do have a lot of minority contractors who don't want to do business with the city because of slow payments ... with all of the past drama and they don't want to be part of that," Jones said.

In a June 28 report drafted at the request of Council Pro Tem Mary Sheffield after the Free Press investigation, the city's legislative policy division said it believes the city and business community should work together to create programs specifically designed to fund, educate, train and enable Detroit residents for the building and construction trades.

Council member Janée Ayers said while she believes more diversity is needed in the program, she said the city also needs to make a concerted effort to help grow the businesses. Ayers said she, along with Jones, are hosting a small-business empowerment fair later this month.

Ayers said another discussion on the issue may be held soon in the council's budget committee.

"When we talk about contractors, we really need to be talking about inclusion," Ayers said. "... We have to start building the entire foundation to move forward."